Sources of short term loans/finance-BBS 4th year

Concept of Short Term Loan :

  • The loans have short span of time in context of maturity, say it’s repayment. The company generally required these funds to cop up with the demand of money for day to day operation and obligation, i.e. working capital.
  • After establishment of a business, funds are required to meet its day to day expenses. For example raw materials must be purchased at regular intervals, workers must be paid wages regularly, water and power charges have to be paid regularly. Thus there is a continuous necessity of liquid cash to be available for meeting these expenses. For financing such requirements short-term funds are needed. The availability of short-term funds is essential. Inadequacy of short-term funds may even lead to closure of business.
  • Short-term finance serves following purposes
    1. It facilitates the smooth running of business operations by meeting day to day financial requirements.
    2. It enables firms to hold stock of raw materials and finished product.
    3. With the availability of short-term finance goods can be sold on credit. Sales are for a certain period and collection of money from debtors takes time. During this time gap, production continues and money will be needed to finance various operations of the business.
    4. Short-term finance becomes more essential when it is necessary to increase the volume of production at a short notice.
  • 5.Short-term funds are also required to allow flow of cash during the operating cycle. Operating cycle refers to the time gap between commencement of production and realisation of sales.

Sources of Short Term Loans

  • sources
  • 1. Trade Credit
    Trade credit refers to credit granted to manufactures and traders by the suppliers of raw material, finished goods, components, etc. Usually business enterprises buy supplies on a 30 to 90 days credit. This means that the goods are delivered but payments are not made until the expiry of period of credit. This type of credit does not make the funds available in cash but it facilitates purchases without making immediate payment. This is quite a popular source of finance.
    2. Bank Credit
    Commercial banks grant short-term finance to business firms which is known as bank credit. When bank credit is granted, the borrower gets a right to draw the amount of credit at one time or in instalments as and when needed. Bank credit may be granted by way of loans, cash credit, overdraft and discounted bills.

    (i) Loans
    When a certain amount is advanced by a bank repayable after a specified period, it is known as bank loan. Such advance is credited to a separate loan account and the borrower has to pay interest on the whole amount of loan irrespective of the amount of loan actually drawn. Usually loans are granted against security of assets.
    (ii) Cash Credit
    It is an arrangement whereby banks allow the borrower to withdraw money upto a specified limit. This limit is known as cash credit limit. Initially this limit is granted for one year. This limit can be extended after review for another year. However, if the borrower still desires to continue the limit, it must be renewed after three years. Rate of interest varies depending upon the amount of limit. Banks ask for collateral security for the grant of cash credit. In this arrangement, the borrower can draw, repay and again draw the amount within the sanctioned limit. Interest is charged only on the amount actually withdrawn and not on the amount of entire limit.
    (iii) Overdraft
    When a bank allows its depositors or account holders to withdraw money in excess of the balance in his account upto a specified limit, it is known as overdraft facility. This limit is granted purely on the basis of credit-worthiness of the borrower. Banks generally give the limit upto Rs.20,000. In this system, the borrower has to show a positive balance in his account on the last friday of every month. Interest is charged only on the overdrawn money. Rate of interest in case of overdraft is less than the rate charged under cash credit.
    (iv) Discounting of Bill
    Banks also advance money by discounting bills of exchange, promissory notes and hundies. When these documents are presented before the bank for discounting, banks credit the amount to cutomer’s account after deducting discount. The amount of discount is equal to the amount of interest for the period of bill. This part has been discussed in detail later on in this chapter.
    Sources of Short-term Finance :: 15
    3. Customers’ Advances
    Sometimes businessmen insist on their customers to make some advance payment. It is generally asked when the value of order is quite large or things ordered are very costly. Customers’ advance represents a part of the payment towards price on the product (s) which will be delivered at a later date. Customers generally agree to make advances when such goods are not easily available in the market or there is an urgent need of goods. A firm can meet its short-term requirements with the help of customers’ advances.
    4. Instalment credit
    Instalment credit is now-a-days a popular source of finance for consumer goods like television, refrigerators as well as for industrial goods. You might be aware of this system. Only a small amount of money is paid at the time of delivery of such articles. The balance is paid in a number of instalments. The supplier charges interest for extending credit. The amount of interest is included while deciding on the amount of instalment. Another comparable system is the hire purchase system under which the purchaser becomes owner of the goods after the payment of last instalment. Sometimes commercial banks also grant instalment credit if they have suitable arrangements with the suppliers.
    5. Loans from Co-operative Banks
    Co-operative banks are a good source to procure short-term finance. Such banks have been established at local, district and state levels. District Cooperative Banks are the federation of primary credit societies. The State Cooperative Bank finances and controls the District Cooperative Banks in the state. They are also governed by Reserve Bank of India regulations. Some of these banks like the Vaish Co-operative Bank was initially established as a co-operative society and later converted into a bank. These banks grant loans for personal as well as business purposes. Membership is the primary condition for securing loan. The functions of these banks are largely comparable to the functions of commercial banks.

Financial Report/Statement – BBS 1st Year

Meaning & Concept

Financial statement or financial report is a formal records of financial activities and position of a business, person or entity in terms of the liquidity position, profitability, wealth valuation and obligations.

Financial statements are also considered as an output or end product of accounting system, designed and presented in a structured manner and in a form of easy to understand, which is audited by government agencies, registered auditor, as well as professional accountant to ensure its accuracy for tax, financing and investing purpose.

This report is generally presented in company’s annual general meeting (AGM) alongwith management discussion and analysis, and open to the all stakeholders.

Management of the company is accountable towards it’s shareholders about the company affairs, the company’s financial affairs to be presented in precise reports by such team, which is called financial report or statement.

The Reports are prepared on factual data, which is a guideline for the management to take future decision.

Financial Statement Generally consist for different statements:

  1.  Income Statement: The statement also known as comprehensive income, statement of revenue and expenses, P&L statement which is the record of company income and expenses during a specific period of time.
  2. Balance Sheet : This is also called statement of financial position, reports on a company’s assets, liabilities and owners equity at given point in time.
  3. Statement of Changes In Equity : Its also known as equity statement or statement of retained earning, report on the changes in equity of the company during the stated period.
  4. Cash Flow Statement : It’s the report on the company’s cash flow activities, particularly it’s operating investing and financing activities.

Features of Financial Statement

  1. The report prepared by the Management of the company, say CFO(Chief Finance Officer) to intimate the corporate financial affairs to all stakeholders.
  2. It’s Output or end product of company accounting system presented in precise format and easily understand by following the principles of GAAP (General Accepted Accounting Principles).
  3. It consists the data of specific point of time and prepare for that particular tenure.
  4. Complexity of preparation of such statements depends on the nature transaction, size of business operation and complexity of transaction of the company.
  5. It is audited by government agencies, registered auditor, authorized accountant to ensure the accuracy.
  6. It’s the key aspect of company AGM, where it should be presented along with management discussion and analysis.
  7. These are the key reports, on the basis of which stakeholders used to make relevant decision such as investing decision, Financing Decision and so on..

Venture Capital – Tutorial Notes (BBS-4th Year)

Meaning and Concept

This is the type of private equity, a form of financing by the firm or any other entity to small start -up say, early stage or emerging firm that have high feasibility and potential to success in the industry and have possibility of high growth in terms of volume of transaction, numbers of employees, expansion of operation and possibility of quick high valuation in the specific industry.

The aims to this investment by the investor say firm or funds, to seek the ownership or equity in that particular start-up rather having the high return even though they are eager to invest only at the stage of growth.

These investors are investing at high risk as start up firms generally posses high level of uncertainty, However they are optimistic about the success of the business keeping aside the fact that the star-up companies have high rate of failure.

The start up are generally based on innovative technology or business model and they are usually from the high technology industries, such as IT, Clean Technology or bio Technology.

The venture capital is also a way in which the private and public sector can construct an institution that systematically creates a business network for the new firms and industries, so that they can progress and develop. This institution helps to identify promising new firms and provide them with finance, technical expertise, mentoring, marketing know-how, and business model.

Financing Stages of start-up/Life Cycle of financing


  1. Valley Of Death :   This is the stage where the ideas of the new business come up in the mind of entrepreneur, this is also known as the stage where the venture seeding has been grouted by the concern individual where the angel investor acted as a mentor and investor.

Most of the company born and die in very early stage, there is high risk of being failure in this stage. Accelerators and angels are the key supporter in terms of the ideas, mentoring, and investment.

2. Break Even Point : The company now in position to bear its operating cost from the company revenue itself. There is no profit but simultaneously no loss as well. Which indicates company can able to survive from the infancy.

In this stage now VC can start to think positively about the investment in the business, but still not invested till they are fully ensure themselves, the company can be in growth trend in future.

3. Growth Stage:

A. Early Stage Now, company in position to earn profit gradually day by day, the profit trend is upwording direction in different stage. Along with the growth, company needs investment for different purpose such as to purchase plant with better production capacity, hire more numbers of employees, set up new branches and so on.

B. Later Stage : This stage of the growth where company is in position to earn good profit, operations are smooth and situation are in favour. But the thrust of more and better never end by nature. Stability position for long time is never a good sign for the today cut throat competition age where there is rapidly changes are occured in term of technology and innovation.

C.Mezzanine position is the situation where the start up required money for expansion.

4. Exit of Venture capitalist :  

Vcs can exit through IPO (Initial Public Offering), or secondary sale or an acquisition.

Early stage VCs may exit in the acquisition round when new investor by the share of existing investor. However, in some cases, company can allow  VCs to exit if the company is very close to IPO round.

Financing for Entrepreneurial Venture (BBS-4th Year) – Tutorial Notes

Planning is the framework for course of action to be taken to achieve the desired result. The financial planning for start up is the responsibility of the CFO ( Chief Finance Officer of the company). Where there is matter of finance, entrepreneur should be more alert, as failing in plan is planning to fail.

No any entrepreneur venture can exist without investment, i.e. finance, say money, as it is required in every stage from set up to operation as well as post operation.

Funds Required for:

  1. To carry essential and initial legal procedure such as it’s incorporation (Application fee, lawyer fee, Stationery expenses and so on), which is known as preliminary expenses of the company and written off in different span of time.
  2. To Procure the required current assets, generally having potentiality of cash conversion within a year, such as cash itself, inventory and other supplies
  3. To set up the company and office required fixed assets such as building, land, machineries and so on.
  4. To run the business major activities such as sales, the promotional cost is to be beared.

The financial planning allows an entrepreneur to estimate the quantity and timing of money needed to start their venture and keep it running.

The Key Questions for an entrepreneur are:

  • Is it worthy to invest time and money in the business???
  • What is the cash burn rate???
  • How to minimize dilution by external investors???
  • Scenario Analysis and contingency plan???

Determination of  Financial Needs

The first stage in raising capital is to understand how much capital you need to raise.

Successful businesses anticipate their future cash need, make plan and execute capital acquisition strategy well before they fund themselves in cash crunch.

Three Assumptions to guide start-up fund raising

  1. As Business grows, it often go for several rounds or stages of financing. These rounds are targeted to specific phase of the company’s growth and required different strategies and types of investors.
  2. Raising capital is an on-going issue of every venture.
  3. Capital acquisition takes time and needs to be planned accordingly.

Angel investors

Angel investors, also known as private investor, Business Angel, informal Investor, or Seed Investor.

An affluent (Wealthy) individual, who provides capital for a business start-up, usually in exchange of convertible debt or ownership equity.

Group of such individual organize themselves into Angel Group or Angel Network to conduct research and share the research finding, and pool their investment capital, as well as provide advise to their portfolio companies.

Angel investor are often retired entrepreneurs or executives who are interested to be updated of current development of particular business arena, rather focusing on pure monetary return.

They are intended to use their experience in real business by mentoring another generation of entrepreneurs.

Angel Investors bear extremely high risk and are usually subject to dilution from the future investment round.

Professional Angel Investors are seeks high investment that have potential to return ten or more times their original investment within five years, through a defined exit strategy.

Angel investors are considered as important source of financing for start up even it has expensive source of fund (20-30%), because cheaper source of capital, such as bank financing, are usually not available for most early stage venture…

Worksheet: Definition, Types, Preparation Process (Explained)

Multiple column sheets wherein all necessary information used for the preparation of the financial statement is recorded in a systematic process is called a worksheet.

The worksheet is not a permanent account.

It is not a part of a journal or ledger. It is a device used for an easy preparation of adjusting entries and financial statements.

The worksheet is a multi-column sheet or a computer spreadsheet where accountant writes, in brief, information necessary for preparation of adjusting entries and financial statements.

What is Worksheet: Types of Accounting Worksheet

In bigger organizations where the volume of accounts and adjustments are much more, the possibility of error remains at the time of adjustment of adjusting entries with ledger accounts if the worksheet is not prepared.

Preparation of financial statements correctly becomes complicated and sometimes is delayed. In the present day world, it has become the practice of preparing worksheet in the big organizations before preparation of financial statements.

Accountants make adjustments of adjusting entries with other relevant ledger accounts before preparation of financial statements.

Before preparation of financial statements, the accountants want to be sure of the arithmetical accuracy of accounts by making adjustments of adjusting entries with ledger accounts through the worksheet and then go for the preparation of financial statements.

The worksheet is prepared at the end of the accounting period before the preparation of financial statements.

3 Types of Worksheet are;

  1. General worksheet,
  2. Detailed worksheet,
  3. Audit worksheet.

They are explained below,

The general worksheet

The general worksheet contains four to six pair columns. Generally, five pair columns or ten columns worksheet can serve the purpose of general business. These five pair columns are;

  • Trial balance,
  • Adjustment,
  • Adjusted trial balance,
  • Income statement, and
  • Balance sheet.

The detailed worksheet

The detailed worksheet is prepared for containing more detailed information over a general worksheet. Sometimes extra sheet containing columns are enclosed for explaining particular items. The matters for which item-wise lists are to be prepared are:

  • Accounts receivable and accounts payable lists,
  • Production expenditure lists,
  • Insurance premium lists etc.

Audit worksheet

Audit worksheet is used for preparing financial statements and lists for various uses of business concerns. Audit worksheet is prepared in the light of auditing of various items included in the worksheet. It is an aid to audit the work of a business concern.

The worksheet is a technique of accounting through which the accounting information is integrated for adjustment and classification.

The main objective of the worksheet is to verify the accuracy of accounting information before preparation of financial statements.

For preparing an accounting worksheet one must follow 8 Simple Steps to verify accounting information accuracy before preparation of financial statements.

Columns of the worksheet are drawn mainly as per necessity.

The number of columns of worksheet depends on the demand of the particular organization.

Preparing a Accounting Worksheet following 8 Simple Steps

8 Steps of Preparing Accounting Worksheet

  1. Name of business organization and preparation date.
  2. Drawing column and mentioning the head of the column.
  3. Unadjusted Trial Balance.
  4. Adjustment column.
  5. Adjusted trial balance column.
  6. Income statement column.
  7. Retained earnings statement.
  8. Balance sheet.

Steps of preparing accounting worksheet are explained below;

1. Name of business organization and preparation date

At the beginning of worksheet the name of the organization for which worksheet is prepared is to be written in the bold form and also the date of preparation of worksheet is to be mentioned.

2. Drawing column and mentioning the head of the column

Drawing column titles are to be mentioned here.

For example, serial number in the first column, the title of accounts in the second column and thereafter pair columns.

3. Unadjusted Trial Balance

After the serial number and accounts title columns, in unadjusted trial balance, pair column ledger accounts balances are posted straight to check the agreement of trial balance.

This trial balance is called pre-closing trial balance as it is prepared with the ledger balances before keeping accounts of adjustment items. Debit and credit balances of ledger accounts are written in the debit and credit columns of the trial balance respectively.

4. Adjustment column

At the end of the accounting period, the items or transactions which have not been accounted for are written in the debit and credit of adjustment columns.

At the time of making adjustments, if there does not exist any item in the trial balance for debiting and crediting, these adjusting items are to be written below the trial balance under appropriate head(s) in debit and credit columns of adjustment.

To identify the adjusting items separate code number for each item be given in debit and credit columns. Thereafter debit and credit columns of adjustments are totaled for assuring their agreement.

5. Adjusted trial balance column

Writing necessary adjustments in the adjustment column, the balance of every account relating to adjustments is ascertained and thereafter all ledger account balances including adjusted ledger balances are recorded in the debit and credit columns of adjusted trial balance.

That is, unadjusted balances of trial balance are adjusted as per rules and these are written down in the column of adjusted trial balance.

Writing all ledger balances – adjusted and unadjusted in adjusted trial balance totals of debit and credit are ascertained to prove the arithmetical accuracy of the ledger accounts.

6. Income statement column

All periodical expenses and incomes of adjusted trial balance are written in debit and credit column of income statement respectively.

The difference between total income and total expenses of the income statement is called profit or loss. The profit/loss of income statement is transferred to the balance sheet if the retained earnings statement is not prepared.

7. Retained earnings statement

In case of a joint stock company, retained earning column is kept in the worksheet before balance sheet column.

Here previous year’s profit / loss if any and income/loss of income statement of the worksheet are written in the credit money column and distribution of items regarding distribution of profit such as, dividend paid, proposed dividend, income tax paid, creation of fund are shown in the debit money column of retained earnings statement.

The difference between the totals of debit and credit columns is transferred to the balance sheet column of the worksheet.

8. Balance sheet

All assets and liabilities of adjusted trial balance including the balance of income statement / retained earnings statement are written in the debit and credit columns of the balance sheet of worksheet i.e., assets are written in debit money column and liabilities, owners equity are written in the credit money column.

Totals of debit and credit column of the balance sheet are equal.

The number of columns of worksheet and titles of columns depends on nature and demand of the business concern.

How to Prepare financial statements from a worksheet

Prepare financial statements from a worksheetPrepare financial statements from a worksheet is relatively easy because all necessary accounting information is properly presented and structured in the worksheet.

The worksheet contains all the information for preparing financial statements. The income statement is prepared with data of debit and credit columns of income statement of the worksheet.

The balance sheet is prepared from balance sheet columns of the worksheet.

Financial statements of a business concern mean income statement, retained earnings statement/owners’ equity statement and balance sheet prepared at the end of the accounting period.

The statement which is prepared for ascertaining profit (loss) of a business at the end of an accounting period is called an income statement.

The income statement is of two types:

  1. General or single-step income statement: In this statement, all expenses are deducted straight from income to ascertain net profit (loss). Here the expenses are not shown in the classified form.
  2. Multiple-step income statement: In this statement, the cost of goods sold is deducted from sales revenue to ascertain gross profit. From gross profit all operating expenses such as selling expense, administrative expenses etc. are deducted to find out net operating income.

After that, other non-operating incomes like rent revenue, interest revenue etc. are added to net operating income from which other non-operating expenses such as interest expense, loss on sale of assets etc. are deducted to ascertain net profit.


(Source :

Does Social Media Enhance an Individual to be hired??

Lots of professionals seeking an opportunity to embark their career with a better platform experiencing difficulties in finding better sources. His intellect used to roam around the possible network and which are being segmented as;

  1. Personal Contact : Friends & peers,Ex-colleagues, and friends of friends
  2. Public Contact : Nowadays social media helps people to unseen people to be a friend and that is expecting a great achievement of an individual.

while I was surfing my network I came to see a update posted by on of my network friend which are as it is copied below;

“I have spent almost a month on LinkedIn, desperate for a new job. Mind you, I have taken this platform very seriously.

People who accept my requests, don’t respond to my job queries and some just end up without answering.

I’m definitely okay with you not wanting to do me a favour. I will also politely apologize if my queries annoy you. But seriously, if this as a platform doesn’t allow for us to look for a job; I don’t understand what people are really expecting from us.

We all begin from the bottom. Why have people become so hesitant to help us out?

Truth be told, we not only look for a job but also a kind mentor.”

Garima Singhal

After seeing the comment on her update I realised that people never try to leave the chance to show their superiority and the thought of being a philosopher. They are raising the question on her unique selling point, her talent and her potentiality.

A step for a new Revolution in Mineral Water Industry – Elixir Mineral Water Pvt. Ltd. a proposed venture in Nepal

Elixir® Mineral Water Pvt. Ltd. is a licensed and standard bottled water production company that will be located in Garuda Municipal Corporation – 5, Shivanagar, Rautahat, Nepal. We have our own infrastructure & facilities available with us including Plants, land & Building.

We are in the bottled water production business to engage in purifying and bottling water, purifying and bottling carbonated water, labeling bottled water products, promoting bottled water brands, production bottled still water, production of bottled flavored water, production of bottled sparkling water.

Much more than producing healthy, portable and well packaged bottled water, our customer care is going to be second to none. We know that our customers are the reason why we are in business which is why we will go the extra mile to get them satisfied when they visit purchase any of our bottled water and also to become our loyal customers and ambassadors

Our Vision Statement

Our vision is to become a market leader in the line of provider intend to avail the pure fluid to nook & corner of country civilization.

Our Mission Statement

Our mission is to secure top rank position in the Nepalese Mineral water industry by utilising optimum available resources, coping with technical advancement & international product rivalry, & providing better customer value.



Elixir – Promise of Purity

Participating in Job fair in Management College to hire the candidates for my company

Presume result of your Conduct – 1

‘The interaction between interviewer and interviewee are misunderstood that, the process is only for selection or rejection of interviewee but the fact is the second party is also in position to judge the capabilities of the first party.’

Call for an interview depends on the facts given in the resume of the job seeker, how professionally led out, and comply with relevant facts and figures of the requirements of the position. The procedures of recruitment and selection may varies as per the nature, size, policy and set standard of the establishment, but they are finally intended to acquire best possible and suited talented of the position

Its felt that  most of the well experienced and deserving candidates are unable to crack the interview, why?

The bitter truth is Judgemental interview which creates the situation of above issue. The predetermined decision of selection is the big injustice for the person who has just completed college degree and seeking a platform to start career.

The doubt may emerge in the naive about the existence of this aspect of interview because he/she has never been taught in the university about this dark side portion of first step of the career, but its agreed by the professional during his/her initial phase of the career.

Nepotism, favouritism cronyism

Do you have any relatives in the organisation who has recommended for you? Are you affiliated to any group known to the the panel members? Do you have any friends or ex-colleagues working in the companies? These are the common questions have very special place in the job application form of most of the company. You can realise why these questions have this much preference, only the reason is to attack on the professional ethics. If these has no importance in the interview process as it is being disclosed by the recruiter that these answer will have no effects on the process of hiring.

These three elements are big issue in the today’s corporate culture creating unfair hiring, placement, socialisation and appraisal, and growth of individual. These are the things which creates high employees turnover.

To be continued……